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Interview: Michael Hale, Director, Balamara Resources

Michael Hale talks to Coaltrans about his optimism for the future of coking coal and his thoughts on the long term outlook for thermal coal

You can hear more from Michael at The World Coal Leaders Network in Barcelona on 25 - 27 October 2017. 

Coaltrans Conference (CC): Hi Michael. Please can you give an overview of Balamara Resources, your role, and your background in the industry?

Michael Hale (MH): Balamara Resources is an Australian public company which we decided to de-list from the ASX. We have approximately one thousand shareholders many of whom have invested for long term returns generally through their pension funds.

Balamara is focused on the development of two coal assets in Poland, one with high quality coking coal and the second is a much larger thermal coal project. I see myself in the risk management business, my role is to assist the company to profitability with as little risk as possible to our shareholders capital. I am not from the coal industry, my background is in government and finance.

Coal has been having a better than expected year in many markets. How is this impacting your view on the market going forwards?

MH: With coking coal I am optimistic as I do not see any alternatives for coke or steel in the short to mid-term. With thermal coal I expect demand may exceed supply in the next few years regardless of the European stance. The difficulty is that if this results in sustained higher prices we will open the door to gas as an alternative and once this happens the generators will never convert back to coal. With the roll out of public policy intended to ensure a disincentive for higher carbon fuels I expect this process will follow the usual path of the more affluent countries reducing carbon levels followed in time by the rest of the world either through incentives or pressure by investors or customers. It is fair to say my view is generally positive for coking coal taking into account the usual shorter term rise and fall in the markets. I am however quite negative on the long term position for thermal coal, we may expect a strengthening of the political will and a refining of the policies aimed at replacing coal altogether. My view is that in the shorter term there are opportunities to produce thermal coal at healthy margins but in say thirty years’ time without some major breakthrough it is difficult to see coal playing a significant role in power generation.

Many see the European coal market in permanent decline, but Germany remains a major importer, and France had to rely on coal earlier this year due to problems with its nuclear infrastructure. How long do you think coal will remain as an important part of the energy mix in Europe?

MH: My view is that for the European thermal coal market it is no longer a case of if but when. Given my involvement in developing coal assets in Europe I expect that in the short to medium term Europe will still need thermal coal, I am encouraged by the admittedly one off relaunch at Dattln. These are essentially political issues and European politics is still in a state of flux. I expect the coking coal market in Europe will become solid as steel producers seek to produce specialist steels to avoid direct competition with Chinese steel makers.

Published October 2017

This content is provided by Coaltrans Conferences for informational purposes only, and it reflects the market and industry conditions and presenter’s opinions and affiliations available at the time of the presentation.

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